Kool Kids Daycare Ltd in Lofthouse, Wakefield, was given the worst rating possible in all key areas when the watchdog visited in October.
The Canal Lane business was found to be inadequate in its quality of education, behaviour, development and leadership.
And the resulting report provided a scathing assessment, raising concerns over a lack of staff to manage the children, that staff were "poorly organised" and there was no monitoring of children's progress.
But safety was a primary issue flagged up by the visiting inspector.
The report read: "Children are not supported to feel safe, settled and secure because they do not have a key person.
"Significant weaknesses in staffing result in not enough staff working with the children.
"This results in children's safety not being maintained and their individual needs not being met.
"Staff try and provide comfort to unsettled children and they also try to engage them in their chosen play experiences. However, due to the poor organisation of staff throughout the nursery, staff are unable to provide children with quality time and interaction.
"Children's safety is not protected. The outdoor area is not kept secure, and several staff do not have a clear understanding of child protection."
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The nursery received a visit by Ofsted a week after the initial assessment and it was found improvements were made.
They said the number of children being cared for had been reduced so the staff-to-child ratio was now correct, that youngsters remained in the appropriate room for their age, and staff knowledge of child protection had improved.
The outdoor area was now secure and all potential hazards had been removed, and the menu had been reviewed to ensure a more healthy, balanced diet.
The report reads: "We are satisfied the provider has met the safeguarding and welfare actions raised."
The nursery was contacted for a comment and said: “Ofsted returned a week later and all actions have been taken. We are happy with that.”
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